Confused about NI and income tax

Opilgrim

My situation:
I have worked for a company till July 2013. My salary was around 30k per year.
After I left my job, I started working as self employed. This year I will earn less than 5k as self-employed.

My questions:
· Can I get a Certificate of Small Earnings Exception (SEE)? My self-emploed earnings are less than £5,725 this year (but not my employment and self-employment earning combined)
· Do I need to pay NI if my self-employed earnings are less than £5,725? (But again not my employment + self-employment earnings)
· How do I define income tax I need to pay? Do I have tax free allowance of £786.67 per month from August to January ( when I work as self-employed)?

I[FONT=&quot]’[/FONT]m confused and will appreciate your help.
Thank you.

Jon

Opilgrim

Thank you.

Just to clarify, does it mean that I have £786.67 x 6 months (August to January) tax free allowance and don't need to pay income tax for these 6 months if my income is lower than £4720 (tax free monthly allowance times N of months)?

NYM

This link may help you to understand a little better.

http://www.hmrc.gov.uk/working/intro/employed-selfemployed.htm

zygurat789

Opilgrim wrote: »

My situation:
I have worked for a company till July 2013. My salary was around 30k per year.
After I left my job, I started working as self employed. This year I will earn less than 5k as self-employed.

My questions:
· Can I get a Certificate of Small Earnings Exception (SEE)? My self-emploed earnings are less than £5,725 this year (but not my employment and self-employment earning combined)
· Do I need to pay NI if my self-employed earnings are less than £5,725? (But again not my employment + self-employment earnings)
· How do I define income tax I need to pay? Do I have tax free allowance of £786.67 per month from August to January ( when I work as self-employed)?

I[FONT=&quot]’[/FONT]m confused and will appreciate your help.
Thank you.

Jon

You should by now have registered yourself as having sel-employed income. This means that you will be sent a tax return to complete your first one should be 2013/14 due by 31/1/2015 (but don't leave it that late)
You have to account to HMRC for your income for the tax year, so it will not be until your tax return is submitted that HMRC will be able to agree your self assessed tax liability.
The tax return will contain all your income and tax paid by deduction, so savings salary business profits etc etc and any reliefs and allowances.
You will have to make a balancing payment 31/1/14 being all the tax due for that year AND a first payment on account of next year being half of balancing payment. The other payment on account is due 31 July. When you do your second tax return the balancing payment will be reduced by the two payments on account already made. These payments are not only for Income tax but also for class 4 national insurance.
All very civilised and relaed with tax being paid some time after the profit is made. NIC are different, if you have registered you should already bee paying class 2 £2.70 pw. Stop the DD now and apply for exception immediately if you think your self employed income will be less than £5725 in 2013/14, £5,885 in 2014/15.
Remember anything may happen your profits may be considerably more than £5,000!!!

Opilgrim

blondebubbles

Total pay to date is higher than 9k.
Total tax to date is lower.

nannytone_2

regardles of whether you are employed or self employed .....

if you have earned £9440 since april 2013, you should be paying tax